(Reuters) – Potash and salt miner K+S reiterated its full-year core profit guidance on Thursday, as it expects soaring prices to offset the impact of a potential gas shortage in Germany.
The group confirmed its April forecast of 2022 earnings before interest, tax, depreciation and amortisation (EBITDA) of between 2.3 billion and 2.6 billion euros ($2.37 billion and 2.67 billion) but now included a gas bottleneck scenario in its calculations.
This scenario assumes a 25% reduction in natural gas availability in the fourth quarter, which together with a new gas levy would lead to a cost burden in the low triple-digit million euro range, Chief Executive Officer Burkhard Lohr said in a statement.
Last week, Germany’s cabinet imposed a levy on gas consumers from October to help suppliers hit by exploding import prices caused by Russia’s invasion of Ukraine.
Potash demand remained “significantly” below last year due to limited supply, Lohr added, though he predicted that spot prices would stabilise at a high level in the second half of the year.
K+S’s EBITDA rose more than six-fold year-on-year to 706 million euros in the April-June period, beating analysts’ average forecast of 664 million euros in a company-provided poll, while revenues more than doubled to 1.5 billion euros.
Western sanctions on rivals Belaruskali from Belarus and Russia’s Uralkali, which together account for about one third of the world’s potash production, have made the key crop fertiliser more scarce and expensive. “We had very good general conditions for our business,” Lohr said.
Canadian peer Nutrien posted record profits attributable to sanctions on Russia last week but also cut its full-year adjusted profit forecast as it expects higher gas costs to weigh on its nitrogen business.
($1 = 0.9720 euros)
(Reporting by David Latona and David O’Sullivan in Gdansk; additional reporting by Patricia Weiss; editing by Tom Sims and Rashmi Aich)
